Back in the Red After Five Years: Nissan’s ¥221.9 Billion “Triple Burden”

Nissan Motor Co., currently undergoing a major restructuring, finds itself once again at a critical crossroads. On November 6, 2025, the company announced its consolidated financial results for the first half of fiscal year 2025 (April–September), posting a net loss of ¥221.9 billion, a dramatic deterioration from a ¥19.2 billion profit in the same period last year. This marks the company’s first interim loss in five years and sent shockwaves through the market.

What makes the situation more concerning is that Nissan’s core business also slipped into the red — operating losses reached ¥27.7 billion, compared with an operating profit of ¥32.9 billion a year earlier. Revenue declined 6.8% year on year to ¥5.5786 trillion, highlighting a clear contraction in Nissan’s main operations.

According to Nissan’s own analysis, the company was hit by a “triple burden” of external factors: U.S. tariffs (¥149.7 billion), foreign exchange losses (¥64.5 billion), and inflationary pressures (¥50 billion) — a combined drag exceeding ¥260 billion.

The huge gap between operating losses (around ¥27.7 billion) and the final net loss (around ¥221.9 billion) indicates significant non-operating losses. Nissan attributed these mainly to “reduced profits from equity-method affiliates” and “restructuring costs.” In essence, the losses stem from three intertwined causes: (1) U.S. tariffs directly impacting operations, (2) struggles in Chinese joint ventures, and (3) restructuring expenses to clear past missteps.

Geopolitical risks have also become severe. The suspension of parts supplies from Chinese semiconductor maker Nexperia alone is expected to have an estimated full-year impact of around ¥25 billion, underscoring how Nissan’s business is being torn by global political and economic fragmentation.

Struggles in China: Revisiting the EV Strategy and an Unbalanced Sales Structure

The root cause of Nissan’s losses lies in sluggish sales, which expose deep flaws in its overall strategy. Global sales for the first half dropped 7.3% year on year to 1.48 million vehicles. As widely reported, the weakness was particularly pronounced in Japan and China — two key markets where Nissan’s competitive footing has eroded.

The downturn in China is especially serious. Once a stronghold for Nissan, the market has been upended by the rise of low-cost electric vehicles (EVs) from Chinese manufacturers — a wake-up call for the Japanese automaker. Despite pioneering the world’s first mass-market EV with the “Leaf,” Nissan has failed to keep up with China’s rapid price competition and development speed, forcing the company to fundamentally “rethink” and “reprioritize affordability” in its EV strategy.

Plans drawn up around 2021 have become outdated, and this obsolescence is reflected in the sharp decline in profits from equity-method affiliates. Regional sales trends highlight the imbalance: while sales in Japan plunged 16.5%, the North American market grew by 6.7%, standing as Nissan’s sole bright spot. This indicates a dangerous overreliance on a single pillar — the North American market — for global performance. Ironically, this very market is also the main source of the enormous “U.S. tariff” burden weighing on Nissan’s bottom line.

Selling Its Yokohama Headquarters for ¥97 Billion: A “No-Sacred-Cows” Approach to Restructuring

The shock of Nissan’s announcement extended beyond the size of its losses. Alongside the disappointing results, management unveiled bold measures aimed at revitalization — most notably, the decision to sell its global headquarters building and land in Yokohama for ¥97 billion.

The buyer is a special purpose company (SPC) jointly funded by Hong Kong-based auto parts giant Minth Group and other investors. Under a sale-and-leaseback arrangement, Nissan will continue using the property as its headquarters for 20 years. The sale will immediately bring in ¥97 billion in cash, and Nissan expects to book a special gain of ¥73.9 billion in the fiscal year ending March 2026.

Importantly, this move is not a short-term liquidity measure — Nissan’s automotive business already holds ¥3.6 trillion in cash and cash equivalents. Instead, the funds will be used for “digital transformation initiatives and R&D investment,” signaling management’s determination to secure resources for EV innovation even at the cost of selling its “sacred” headquarters.

This all-out restructuring drive is also evident in production reforms. Nissan announced it will end production of Nissan-branded vehicles at its joint venture plant with Mercedes-Benz in Mexico by the end of November — part of its “Re:Nissan” turnaround plan. As CEO Iván Espinosa noted, the company achieved “over ¥80 billion in cost improvements in the first half,” underscoring the administration’s uncompromising execution.

Stock Rebounds Despite Huge Loss: Hope and Uncertainty Over the Turnaround

Despite the grim headline of a ¥221.9 billion loss, Nissan’s stock price rebounded sharply the following day on the Tokyo Stock Exchange, ending a five-day losing streak. This seemingly paradoxical move suggests that investors recognized signs of progress in the company’s restructuring.

The market’s positive reaction was driven by three factors.
First, while Nissan reported an operating loss for the first half overall, the company actually posted an increase in operating profit for the second quarter (July–September), hinting that its operational bottom may have passed.
Second, investors welcomed Espinosa’s report of “over ¥80 billion in cost improvements,” confirming tangible restructuring progress.
Third, the decision to sell the Yokohama headquarters signaled the management’s serious commitment to rebuilding the company.

Investors also took comfort in Espinosa’s declaration that “automotive free cash flow will turn positive in the second half.” Yet, despite this short-term optimism, two “time bombs” remain.

The first is Nissan’s massive competitive gap. In the first quarter of fiscal 2025 (April–June), Toyota posted an operating profit of ¥1.166 trillion, Honda earned ¥244.2 billion, while Nissan logged a ¥79.1 billion loss — underscoring that it is not even on the same playing field.

The second is that Nissan left its full-year net income forecast undecided, with CFO Jérémie Papin explaining that “various impacts of the Re:Nissan initiatives make precise forecasting difficult at this stage.” In essence, management itself admits it still cannot fully quantify the total impairment losses and restructuring costs associated with the overhaul.

The ¥221.9 billion loss, therefore, represents only the initial “bleeding” from a major surgery in progress. The market’s faith in Nissan’s “recovery” remains a bet — one that depends on whether this difficult operation ultimately succeeds.